Rio Tinto: founded on blood

September 6, 2000


Anglo-Australian company Rio Tinto, the world's largest mining company, has more than 60 operations in 40 countries. Antarctica is the only continent that has escaped its ravages.

In every continent where Rio Tinto operates the story is the same: land taken from indigenous people without compensation; workers prevented from freely organising in trade unions; destruction of the environment; and cosy relations with politicians, government officials and dictators.

In 1999, Rio Tinto's turnover was US$9.31 billion (A$14.42 billion) and its after-tax profit was US$1.28 billion (A$1.99 billion). It mines a diverse range of minerals and metals including coal, copper, gold, uranium and iron ore. It controls 55% of the world production of borate, 15% of industrial diamonds and around 8% of uranium.

The company was founded on blood. English capitalists formed the company in 1873 to mine the Rio Tinto copper deposit in Spain. During the Spanish Civil War of 1936-39, when Germany's Adolf Hitler and Italy's Benito Mussolini were in an alliance with Spain's General Franco, Rio Tinto's chief Sir Auckland Geddes told the company's 1937 annual general meeting in London: "Since the mining region was occupied by General Franco's forces, there have been no further labour problems ... Miners found guilty of troublemaking are court-martialled and shot."

This became the model for Rio Tinto's later cosy relationships with South Africa's racist apartheid regime, Chile's dictator General Pinochet and Indonesia's murderous dictator Suharto.

In 1995, Rio Tinto-Zinc (RTZ) merged with its subsidiary Conzinc Riotinto of Australia (CRA), which was 40% owned by Australian capitalists, to form RTZ-CRA. It changed its name to Rio Tinto in 1997. Now it is in the process of buying out North Limited, the parent company of Energy Resources Australia which owns the Jabiluka uranium mine in the Northern Territory.

Rio Tinto has an appalling record in its relations with indigenous peoples. Some examples are:

  • Rio Tinto led the mining industry campaign against native title in Australia in 1997-8;

  • to build the Weipa bauxite mine in north Queensland, Comalco (then a subsidiary of CRA), forcibly removed two Aboriginal communities, at Weipa and Mapoon;

  • Aboriginal sacred sites were almost completely destroyed during construction of the Argyle diamond mines in Western Australia;

  • Indonesia's armed forces (TNI) have killed and tortured indigenous land owners protesting against the Grasberg mine in West Papua. The mine is primarily owned by US-based Freeport-McMoRan, but Rio Tinto has a 12% share in the company and a 40% interest in the mine expansion. Freeport-McMoran provides Indonesian soldiers with transport, food and accommodation; and

  • the establishment of Rio Tinto mines in Bougainville, Indonesia and the Philippines has resulted in large numbers of indigenous people being thrown off their land with little or no compensation and appalling environmental consequences.

Union busting

Over the last 15 years, Rio Tinto has waged a vendetta against trade unions. In Australia, the company has de-unionised most of its metalliferous mining and smelting operations. Its main tactic has been to frustrate the collective bargaining process then offer individual contracts to workers desperate for a pay rise.

Rio Tinto is now focussing its Australian anti-union campaign on its coalmines. In six years, Rio Tinto has reduced its coal operations work force by 28% and cut real wages by 20%.

In Zimbabwe, Rio Tinto has tried to bypass the Associated Mineworkers of Zimbabwe by setting up a company "sponsored" by a committee of workers.

In South Africa, the National Union of Mineworkers is disputing Rio Tinto's practice of sacking workers and then employing contract workers to do the same work at a lower pay rate. Rio Tinto profited greatly from collaborating with the apartheid regime. It developed the Palabora copper and uranium deposit in the Transvaal while the apartheid regime was savagely repressing the black majority.

While the South African armed forces were illegally occupying Namibia in the 1970s, Rio Tinto violated United Nations sanctions by establishing its Rossing mine there and illegally selling the uranium it produced.

Rio Tinto still discriminates against black workers. In South Africa the company forces them to live in old housing compounds away from their families. At its Rossing mine, Rio Tinto maintains racial segregation in company housing. Black employees are paid rock-bottom wages while their white counterparts are paid above the maximum of the common scale, in what is called an inducement band. In 1998, Rio Tinto suddenly pulled out of negotiations with the Mineworkers Union of Namibia over ending racial discrimination on the job.

Environmental devastation

Typical of Rio Tinto mining operations is the Kelian goldmine in East Kalimantan, Indonesia, which has poisoned the nearby river so that it can no longer be used for drinking and bathing.

The expansion of the Grasberg mine in West Papua will result in 285,000 tonnes of tailings contaminated with toxic heavy metals being dumped into the Ajikwa river system every day. This is equivalent to a 10-tonne truck dumping its load every 10 seconds.

When the Panguna copper mine in Bougainville was operating, it dumped 1 billion tonnes of waste into the river system, killing all aquatic life and creating a 480-square-kilometre blot on the environment.

This destructive practice helped make Bougainville Copper Ltd CRA's most profitable single venture in 1973 with an annual profit of A$158 million. By the early 1980s, BCL was contributing a hefty 23% of RTZ's pre-tax profits, despite representing only 9.4% of the corporation's total assets and 8% of its sales.

Rio Tinto's destructive practices around the world have led to opposition from workers, indigenous land owners, local communities and environmentalists. Rio Tinto has developed a strategy for dealing with community opposition.

Rio Tinto's subsidiaries usually have names that are quite different to that of the parent company, allowing it to hide its role in destructive mining developments.

In dealing with indigenous peoples' opposition, Rio Tinto usually begins negotiations with several indigenous groups. Once it establishes which group can be bought off, it ceases negotiations with all the others and claims that it has indigenous support for its project.

When faced with community opposition, Rio Tinto sometimes sets up its own "community" groups that support its mining projects.

Cosy relationships

Rio Tinto likes to write the rules by which it operates. The March 2000 edition of Mining Monitor, published by the Minerals Policy Institute, reported that Rio Tinto has established a joint project with Australian Legal Resources International, a human rights group affiliated to the Australian Council for Overseas Aid. Part of the project will involve drafting of "environmental law, human rights law, constitutional law, bankruptcy and corporate law" for Indonesia.

Rio Tinto typically gets substantial assistance from governments around the world. For example, in Bougainville it won a five-year tax holiday. At Weipa, it paid a token A$4 per square mile in rent for the land. Its Tiwai Point smelter in New Zealand was sold electricity at rates 13 times cheaper than household consumers pay.

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